London stocks had extended gains by midday on Friday, with sentiment boosted after China cut a key interest rate, as investors mulled better-than-expected retail sales data but a grim reading on consumer confidence.
The FTSE 100 was up 1.8% at 7,435.67, having slumped a day earlier amid worries about inflation and global growth.
The People’s Bank of China cut a key lending benchmark earlier by the most on record as it looks to support a slowing economy and support housing demand. The Bank cut the five-year loan prime rate – its mortgage reference rate – by a bigger-than-expected 15 basis points, to 4.45%, and left the one-year rate unchanged at 3.7%.
Analysts had been expecting a five basis points reduction across both tenures.
Danske Bank said: “The Chinese housing market has been under pressure for several months and both home sales and prices are declining. Additionally, the rest of the economy is under pressure from Covid-19 lockdowns.
“Unlike Western central banks, PBoC is in easing mode, which eventually should support global growth, all else equal.”
On home shores, figures released by the Office for National Statistics showed that retail sales unexpectedly rose in April, underpinned in part by an increase in food store sales.
Retail sales were up 1.4% following a 1.2% decline March, and versus expectations for a 0.2% drop. Compared with pre-Covid February 2020 levels, retail sales were up 4.1%.
Food store sales were ahead 2.8%, mostly due to higher spending on alcohol and tobacco in supermarkets, the ONS said. Meanwhile, fuel sales rose 1.4% in the month, and sales at non-food stores were 0.6% lower.
ONS deputy director for surveys and economic indicators, Heather Bovill, said: “April’s rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money.”
In the three months to April, retail sales were down 0.3% following a 0.7% decline in March.
Danni Hewson, financial analyst at AJ Bell, said: “The unexpected upturn in retail sales could be viewed as a positive sign that the consumer isn’t as bruised as other data suggests. But digging into April’s figures the big uptick in food and drink spend in supermarkets might indicate that people are choosing their kitchen tables over pubs and restaurants as they look to save money.
“Whilst food spend has been largely unchanged, which suggests people are still being cautious, spend on alcohol and tobacco has soared. Life’s little luxuries, the things that help us get by when times are tough, will have to come in under budget as those budgets are tested.”
Separately, a survey from GfK showed that consumer confidence fell to its lowest in May since records began in 1974 amid the cost-of-living crisis. GfK’s consumer confidence index fell 2 percentage points to -40.
In equity markets, Asia-focused insurer Prudential was the top gainer on the FTSE 100 after the China rate cut.
Cybersecurity firm Darktrace surged to the top of the FTSE 250 after US peer Palo Alto lifted full-year guidance.
Merchant banking group Close Brothers was in the black after saying it had performed well in the third quarter.
Croda rallied after it backed its full-year expectations and said trading in 2022 has been strong, with continued sales and profit growth across the group.
Gambling software development firm Playtech surged after it said talks with TTB Partner were still ongoing and “progress continues to be made” but added that it was “conscious that TTB has been considering a possible offer for Playtech for 15 weeks”.
Outside the FTSE 350, shares of THG sparked after the online retailer said late on Thursday that it had rejected a £2.1bn takeover approach from Belerion Capital Group and King Street Capital Management and after property tycoon Nick Candy’s Candy Ventures revealed it was weighing up a £1.4bn bid.
FTSE 100 (UKX) 7,435.67 1.82%
FTSE 250 (MCX) 20,007.11 1.62%
techMARK (TASX) 4,377.71 2.08%
FTSE 100 – Risers
Royal Mail (RMG) 315.70p 5.23%
Prudential (PRU) 1,024.00p 4.79%
ITV (ITV) 72.66p 4.79%
Flutter Entertainment (CDI) (FLTR) 9,278.00p 4.41%
Dechra Pharmaceuticals (DPH) 3,540.00p 4.12%
Aveva Group (AVV) 2,221.00p 4.03%
Melrose Industries (MRO) 120.45p 3.84%
Persimmon (PSN) 2,161.00p 3.74%
Halma (HLMA) 2,157.00p 3.70%
Croda International (CRDA) 6,776.00p 3.45%
FTSE 100 – Fallers
B&M European Value Retail S.A. (DI) (BME) 422.60p -1.47%
Sainsbury (J) (SBRY) 234.10p -1.22%
Imperial Brands (IMB) 1,803.00p -0.88%
Standard Chartered (STAN) 586.20p -0.75%
JD Sports Fashion (JD.) 121.60p -0.49%
Meggitt (MGGT) 775.00p 0.00%
Burberry Group (BRBY) 1,599.50p 0.31%
British American Tobacco (BATS) 3,446.50p 0.41%
Avast (AVST) 484.50p 0.44%
London Stock Exchange Group (LSEG) 7,200.00p 0.47%
FTSE 250 – Risers
Darktrace (DARK) 377.40p 11.00%
Chrysalis Investments Limited NPV (CHRY) 130.60p 7.93%
Countryside Partnerships (CSP) 243.00p 6.86%
Playtech (PTEC) 539.50p 6.83%
Bridgepoint Group (Reg S) (BPT) 289.80p 6.23%
Rank Group (RNK) 102.40p 5.13%
Aston Martin Lagonda Global Holdings (AML) 708.80p 4.54%
Elementis (ELM) 115.10p 4.07%
easyJet (EZJ) 522.00p 4.07%
NB Private Equity Partners Ltd. (NBPE) 1,565.00p 3.99%
FTSE 250 – Fallers
Euromoney Institutional Investor (ERM) 1,002.00p -3.84%
Auction Technology Group (ATG) 903.00p -3.11%
TUI AG Reg Shs (DI) (TUI) 204.40p -2.29%
Clipper Logistics (CLG) 836.00p -2.11%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 313.00p -1.42%
Baltic Classifieds Group (BCG) 132.40p -1.34%
Polymetal International (POLY) 240.20p -0.95%
Baillie Gifford US Growth Trust (USA) 159.00p -0.63%
Coats Group (COA) 78.00p -0.51%
Spirent Communications (SPT) 229.60p -0.26%